Pay for private water even if dams are full

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Sydneysiders may be forced to buy privately produced water even
when the city's dams are full, under one plan for the new
desalination plant.

The State Government, which is still feeling the heat from the
costs of the privately built and run Cross City Tunnel, has not yet
decided whether the unpopular plant at Kurnell should be built with
public or private funds.

The Utilities Minister, Carl Scully, said yesterday he would
make sure there were no "hidden nasties" in any contract drawn up
but he would not rule out revenue guarantees for the plant's
builders even if cheaper water was available from the dams.

Sydneysiders are already footing part of the bill for two pilot
desalination plants at Kurnell. The plants will be used by the
private companies pitching to win the contract but the costs will
not be recouped from the eventual winner.

Mr Scully, who as the former roads minister signed the Cross
City Tunnel contract, said the Government had learnt from the
tunnel experience.

"I think the message we have received from the public is that
they expect full disclosure of all contractual details so if there
is anything learnt out of that process, it's that expectation," Mr
Scully said.

"I can assure the public all documents, all contractual dealings
will be made public."

Mr Scully said that if private funds were used to build the
desalination plant, the investors would seek some assurance from
the Government of receiving an adequate return.

"One model could be that they simply build it and operate it
with our funds. Or they could do it with their funds and we have an
agreed minimal supply irrespective of the dam levels.

"We will build this come what may if we build it and it
rains and the dam levels are full then obviously a cheaper source
of water is to gravity feed Sydney's homes from Warragamba.

"You would then run the desal plant at a minimalist level; you
turn it over just to keep the system working."

The president of the Australian Institute of Project Management,
David Dombkins, said establishing a public-private partnership for
desalination was fraught with problems.

"It's an area where there is going to be very high volatility.
We don't know what the demand for water is going to be," Mr
Dombkins said.

"The second problem is [that desalination] is an area where
there could be radical technological change that could make the
existing technology redundant. What are you going to do then? How
are you going to put up a contract that copes with that?"

Mr Scully said the contractual process would be transparent but
said he would be guided by Treasury and the budget committee on
when and how much would be revealed.

Asked if the public would be able to see the contract before it
was signed, he replied: "That's not for me to determine if
the Government wants me to release documents before, during or
after, I will do that."

It also remains unclear who will pick up the bill for the
Government's promise to offset 50 per cent of the greenhouse gas
emissions generated by the desalination plant.

Desalination uses a large amount of energy. NSW relies heavily
on coal-fired power plants, which are major contributors to
greenhouse gases and climate change.

The managing director of Sydney Water, David Evans, said the
water authority was looking at a range of measures that could
offset the emissions, including tree planting and gas-fired
power.

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